5 days ago
Aakash moves NCLT to implead E&Y in oppression, mismanagement case filed by Byju's
Aakash Educational Services
has filed a plea in the
insolvency tribunal
NCLT, seeking the dismissal of a petition submitted by edtech firm
Byju's
and to implead consultancy firm E&Y, along with its partner Ajay Shah.
In its application, Aakash Educational Services has sought dismissal of the petition filed by
Think and Learn
, owner of Byju's, on the grounds of vexatious litigation couched as an
oppression and mismanagement
litigation, which is not maintainable in the law.
Aakash Educational Services (AESL) submitted that presence of E&Y is "imperative" in the matter, as it was not only privy but the architect of several key financial and strategic decisions taken by it.
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Think and Learn has filed a Company Petition before the Bengaluru Bench of the National Company Law Tribunal (NCLT) against AESL, alleging "oppression and mismanagement" in the affairs of the company under Sections 241 and 242 of the Companies Act, 2013.
Think and Learn is a minority shareholder of Aakash Educational Services, which operates 316 centres throughout the country.
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In the company application, AESL has requested to implead and make E&Y and its partner Ajay Shah a respondent alleging "the records indicate that he helped and played a material and consistent role in advising and facilitating various parties whose interests were privileged and exclusive in a material sense".
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"The proposed Twenty-sixth Respondent (Ajay Shah) is not only privy but the architect of several key financial and strategic decisions of the Applicant during the periods relevant to the Company Petition," it said.
Shah and the team of E&Y (which is respondent no 27) always had access to all privileged and confidential information and were part of the business and strategy discussions of the Applicant Company.
"In any event, since all team members, including Shah, represented E&Y, the said Respondent is being impleaded," AESL submitted, adding that "for reasons of structural and professional accountability, the presence of E&Y is imperative".
AESL also alleged the Resolution Professional of Byju's, which is currently going through an insolvency resolution process, "belongs to the self-same organisation and has made no disclosure to the Tribunal about his knowledge or organisational association either in the Company Petition or before the Tribunal at the time of accepting the appointment".
"This serious matter for the administration of the Insolvency and Bankruptcy Code, 2016 (IBC) requires thoughtful attention by the Tribunal," AESL submitted.
It has requested the NCLT to direct the proposed respondents to file an affidavit on oath disclosing details of all transactions that Ernst & Young LLP has been involved in since 2021 till date, in relation to all related parties, including Think and Learn and GLAS Trust Company LLC.
The broader legal fight centres around the governance and control of AESL, following the failed acquisition by Byju's -- which has been reeling under charges of mismanagement, and alleged misuse of company funds.
Meanwhile, CrestLaw Partners, acting on behalf of Manipal Group (which holds significant stake in AESL), also approached EY, flagging the firm's involvement in advising the Manipal Group in material matters, involving tax and regulatory implications, accounting treatment among others, pertaining to AESL.
